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Social entrepreneurs as change agents in regional development:
The role of linking social capital
Richard Lang
University of Birmingham, School of Social Policy, Housing and Communities Research
Group, Edgbaston, Birmingham, B15 2TT, UK
&
Johannes Kepler University Linz, Institute for Innovation Management,
Altenbergerstrasse 69, 4040 Linz, Austria
e-mail: [email protected]
Matthias Fink
Johannes Kepler University Linz, Institute for Innovation Management,
Altenbergerstrasse 69, 4040 Linz, Austria
e-mail: [email protected]
Presented at the
RSA Annual Conference, Graz, Austria 2016
“Building Bridges: Cities and Regions in a Transnational World”
3rd April – 6th April 2016
Abstract
Linking social capital has been shown to explain the role of change agents in the development
of disadvantaged rural regions. We argue that this perspective can offer valuable insights into
the still under-researched interplay between social entrepreneurs and their institutional
environment. To facilitate research taking such a perspective, we present an analytical
framework, discuss its rooting in various theories and suggest a methodology. This paper
informs researchers active at the intersection of social entrepreneurship and regional
development and equips them for their future studies with a consistent theoretical and
methodological approach.
2
1. Introduction
The continued marginalisation of (structurally weak) rural regions threatens the social and
territorial cohesion in the European Union. Disadvantaged rural regions offer fewer
opportunities for higher education and qualified jobs, and are economically less productive
than urban or intermediate regions. They are faced with intense outmigration and a brain drain
of young, well skilled residents. Not least, rural regions are particularly affected by the
demographic change which puts a burden on the social security systems (EC 2013;
Christmann 2014; Lang, Fink, & Kibler 2014).
Recent entrepreneurship literature has highlighted the innovative and problem solving
capacity of social entrepreneurs as promising new actors for tackling the social and economic
problems of structurally weak rural regions (e.g. Defourny and Nyssens 2010; McCarthy
2012). Thereby social enterprises are understood as hybrid organisations which aim to
provide goods and services for the benefit of a particular community by mobilizing a variety
of resources, ranging from donations and voluntary work to governmental subsidies, and from
market operations. Furthermore, they are ideal typically characterised by their participatory
nature and the involvement of various stakeholders in their governance (Defourny 2001;
Defourny and Nyssens 2013).
Empirical studies show how the institutional context – both in its regulative and social
meaning – can put considerable constraints on the ability of entrepreneurs to foster
innovations in rural, structurally weak regions (e.g. Fink, Lang, & Harms 2013; Kibler,
Kautonen, & Fink 2014). So despite an unfavourable external environment, how do social
entrepreneurs create impact from their ventures and diffuse social innovations?
Against this problem background, the aim of the paper is to investigate the interrelation
between social enterprises and their regional institutional context. Therefore, we introduce
and discuss a conceptual framework which enables a systematic, theory-informed empirical
analysis of innovative organisational practices and institutional elements on different spatial
levels. This framework draws on a place-based institutional approach (Lang, Fink, & Kibler,
2014), and combines an organisational fields (Fligstein and McAdam 2011, 2012) with a
social network perspective (Lang and Novy 2014).
The following chapters focus on each of the aforementioned theoretical perspectives and their
potential for analysing regional social enterprises before we integrate them in our own
theoretical framework and discuss the potential it offers to empirical research.
2. A place-based institutional approach to social entrepreneurship
Following a relational concept of space (Graham and Healey 1999), institutions work
simultaneously at different levels in the spatial hierarchy. Although our study puts a focus on
the regional level, national and even international institutional developments are thus relevant
to and reflected in social entrepreneurship practices in regions.
The following types of institutions can either have an enabling or constraining effect on social
entrepreneurship (Scott 1995, Lang, Fink, & Kibler 2014):
3
regulations, e.g. relating to available legal forms, specific legislation, subsidies
cultural norms and values, e.g. norms of cooperation or reciprocity
social identities, e.g. entrepreneurial, organisational, territorial identities
Individual and collective actors can respond to institutional constraints and benefit from
enabling institutional elements. The place-based approach further highlights that social
enterprises mobilise normative and cognitive institutional elements embedded in a place for
their responses (practices) to the mostly constraining regulative environments (Johnstone and
Lionais 2004; Lang and Roessl 2011; Lang, Fink, & Kibler 2014). In this respect, “place”
refers to a sociological understanding of location that highlights community, social networks
and the cultural identities of individuals as well as collective actors (Harvey 1996; Hudson
2001).
In an empirical study, “place” can initially refer to a regional rural level where the case social
enterprise is embedded. However, this abstract working definition needs to be specified and
narrowed down early on in the project based on empirical data. This is done by identifying the
levels of the regional hierarchy on which the investigated case is rooted and the reach these
roots have on each level. The idea of strategic action fields can help to delineate this reach.
3. Social enterprises as a strategic action field
Institutional theories of fields can complement the place-based focus as they suggest that
institutional elements are constantly reproduced, changed and shaped within discrete groups
of actors in so called organisational fields (DiMaggio and Powell 1983; Scott 1995). Through
organisational interaction, institutional influences (such as regulations) are filtered and shared
meaning is constructed which leads to the idea of institutional logics. The field approach
helps us to focus our analysis of relevant institutions and organisational responses by social
enterprises.
On an abstract level, an organisational field refers to "sets of organizations that, in the
aggregate, constitute a recognized area of institutional life; key suppliers, resource and
product consumers, regulatory agencies, and other organizations that produce similar services
or products" (DiMaggio and Powell 1983, p. 148).
For an empirical analysis, it is crucial to define the relevant organisational field in which the
case social enterprises are embedded and look at its configuration, focusing on the roles (e.g.
“incumbents” and “challengers”) and practices of key actors which influence the case
organisations in their responses to the institutional environment (Fligstein and McAdam
2012).
Classical institutional theories of fields (DiMaggio and Powell 1983; Scott 1995) further point
us to the crucial mechanisms of isomorphism, defined as a “constraining process that forces
one unit in a population to resemble other units that face the same set of environmental
conditions" (DiMaggio and Powell 1983, p. 149). This helps to develop a better
understanding of responses of social enterprises to developments in the institutional
4
environment which can be regarded as practices of imitation (e.g. of successful and dominant
organisational behaviour in the same field or in adjacent fields).
A major shortcoming of orthodox new institutional theory in organisational studies is that
they cannot explain the underlying structural elements and sources for dynamics in
organisational fields, in terms of change and stability (Fligstein and McAdam 2012, p. 8).
Recent strands within institutional analysis of organisations try to build on these classical
elements to explain field emergence and field dynamics. Applying elements of the strategic
action fields approach (Fligstein and McAdam 2012) appears to be especially relevant for an
institutional analysis of social enterprises.
A strategic action field can be defined as “a constructed meso level social order in which
actors (who can be individual or collective) are attuned to and interact with one another on the
basis of shared understandings about the purposes of the field and the rules governing
legitimate action in the field” (Fligstein and McAdam 2012, p. 9)
Given the aim for this paper, our application of the wide-ranging theoretical framework of
strategic action fields has to be necessarily selective. For instance, social enterprises can be
seen as an emergent strategic action field in itself, or they might be considered as
“challengers” in already established strategic action fields (e.g. the non-profit or cooperative
field) where they face “incumbents” and try to induce change.
Furthermore, the strategic action fields’ approach points us to the importance of “socially
skilled action” in fields, i.e. the “cognitive capacity for reading people and environments,
framing lines of action and mobilising people” (Fligstein and McAdam 2012, p. 17).
“Socially skilled actors” are able to perceive and also to seize opportunities in constraining
institutional environments.
Given the aim of this paper, such “social skill” can for instance be related to the ability of
social entrepreneurs to understand a complicated multi-level policy environment and to take
advantage of the support which government bodies offer for enterprise development (e.g
subsidies) and to convince them of their proposed projects. Likewise, “socially skilled action”
also relates to building networks and strategic alliances of interest (even with field
“incumbents”) by appeals to common interests (Fligstein and McAdam 2012, p. 18). In this
respect socially skilled actors can “transcend their own narrow group interests” (Fligstein and
McAdam 2012, p. 18).
4. Socially skilled entrepreneurs and linking capital
The insight that strategic networking can be a form of socially skilled action in organisational
fields opens up another interesting analytical perspective to study the interrelation between
social enterprises and their regional institutional context.
Besides accessing and mobilising horizontal bonding and bridging social capital, we would
argue that when studying the role of social entrepreneurs as agents of change in rural
economic and social development, the existence of a vertical, multi-level type of social capital
5
becomes crucial. However, in contrast to the development and planning literature, this so
called linking social capital has not yet received considerable attention in entrepreneurship
research.
Building on its conceptualisation in the planning and development literature (Woolcock 2001;
Middleton, Murie, & Groves 2005; Lang and Novy 2014; Agger and Jensen 2015), we
theorise that social entrepreneurs represent intermediate actors in the spatial hierarchy who
can establish a link between local communities and key resource holders in the multi-level
institutional environment. This enables them to access and mobilise important resources for
creating and diffusing social innovations by leveraging the effects of existing place-based,
bridging and bonding capital in a place. In this respect, linking capital can refer to the
provision of funding, infrastructure access, information, consultancy, technical support etc.
Access to linking capital can thereby leverage the effects of social enterprise activities in
regional economies leading to employment opportunities for local residents and giving them a
voice in regional governance structures. Holders of critical resources can be found e.g. in
local and regional authorities, regional development agencies, umbrella bodies, or social
investor groups.
Although linking capital can be mobilised through inter-organisational relationships, personal
interactions are highly relevant, as we consider linking capital - as well as bonding and
bridging capital – to be rooted in social network relations (Lin 1999).
Intermediaries can be crucial when it comes to establishing links between social enterprises
and external resource holders. This role can for instance be carried out by umbrella bodies in
social enterprise fields. However, social enterprises themselves can act as intermediaries
when they establish direct ties between local residents and external resource holders. They
provide platforms for personal interactions between those two groups in committee meetings
or annual general meetings. Moreover, as organisations, social enterprises mobilise external
resources for the wider community and thus also act as intermediaries.
Figure 1 displays a multi-level model of linking capital and its relation to other forms of
social capital in a regional setting.
6
Figure 1. Model of linking social capital in a regional context (adapted from Agger and
Jensen 2015, p. 10)
Social enterprises are traditionally seen as organisations which build on strong ties and
bonding social capital among their members. However, social enterprises also exhibit weaker
ties to other organisations in their regions and thus form bridging capital. This leads to a
continuum of regional social enterprises spanning from traditional member-focused to third-
party-focused organisations with a respective mix of bonding and bridging capital as
organisational resources (Hatak, Lang, & Roessl 2015). Additionally, intermediaries can
support social enterprises to establish vertical links to stakeholders in the external
environment, und thus create linking social capital (Lang and Novy 2014; Agger and Jensen
2015).
Returning to the strategic action field perspective, linking capital appears to be crucial to gain
legitimacy for particular social enterprise models within an organisational field. It can also
help social enterprises to establish a dominant field position. In this respect, fragmentations of
certain social enterprise fields might be rooted in actor strategies to facilitate the creation of
vertical linkages, leading to institutional legitimacy for the same core social enterprise model.
This can be exemplified by recent research on social enterprises in the English housing sector
carried out by one of the authors (Lang 2015; Lang and Mullins 2015). In recent years,
England has seen the emergence of a community-led housing field, comprising a diverse set
of primary and umbrella organisations which seek to provide innovative and participative
solutions to meeting housing need. Thus homes are developed, shaped and managed by the
External resource
holder, e.g. regional
government body
Intermediary, e.g.
regional umbrella body
Social enterprise
embedded in regional
organisational
networks
7
residents or local people but with varied organisational and governance structures depending
on local circumstances (Gooding 2013).
However, some of the sub-fields that may now be regarded as part of community-led housing
– especially cooperative housing – have a long tradition in England (Birchall 1992; Rowlands
2009) and could already be considered as well-established organisational fields. Other groups
of organisations, such as the community-land trust movement, seem to have only appeared
more recently on the English housing scene, following active institutional promotion and
international knowledge transfer (Moore and McKee 2012).
Although not always explicitly linked to the cooperative housing tradition and related to other
social movements, the different community-led housing models clearly exhibit cooperative
principles in their governance, such as community self-help, democratic member or resident
control, and ownership (Lang and Mullins 2015). When the self-help housing movement
started to bring back empty properties into use in the 1970s and 80s, it was still associated
with the cooperative housing model and only later established its own brand as well as
umbrella and intermediary organisation called “self-help-housing.org”. Similar national and
regional umbrellas have been established in the English community land trust and cohousing
movement since around the year 2000.
Fligstein and McAdam’s (2012) conception of contests between incumbents and challengers
within unstable and emergent fields might be seen as an appropriate metaphor for community-
led housing in England. This social enterprise field is also a good example how institutional
constraints have led to fragmentations within a traditional organisational field, now
characterised by different organisational responses of strategic field positioning and
approaches of interacting with the external environment, such as government bodies and other
“powerful” actors which can grant legitimacy and thus also much needed resources.
There was a relatively big wave of co-operative activity in the 1970s and 1980s in England
when rental coops were promoted through public funding. However, since then co-operative
housing got little public promotion and never developed into a mainstream form of housing
delivery as in some other European countries, such as Austria or Denmark. Institutional
constraints such as the promotion of norms of individual ownership and responsibility in
housing, together with respective funding legislations by consecutive Conservative-led
governments have contributed to this shift. With the urgent need for longer term affordability
of home ownership (community land trusts) or local action on the empty homes problem
(self-help housing), new cooperative forms of housing emerged on the scene as challengers in
a traditional organisational field. The deliberate strategic positioning as organisational models
that are independent from the cooperative housing tradition should help with state
legitimation and public funding, such as in recent years during the Coalition government’s
“localism agenda” and the establishment of a number of small funding pots (e.g. community
right to build, empty homes community housing grant).
8
5. Integrated analytical framework for studying social entrepreneurship
Based on the previous sections, an integrated analytical framework is introduced in Table 1
which is supposed to be filled with empirical data in qualitative in-depth case studies. The
framework builds on institutional theory for enhancing our understanding of the institutional
embeddedness of social enterprises in disadvantaged rural environments (Berger and
Luckmann 1967; Gonzalez and Healey 2005; Scott 2010; Thornton and Flynn 2003; Welter
2011). Thus, the three columns on the left side of the framework in Table 1 represent three
types of place-bounded institutions which can have constraining or enabling effects for
regional social entrepreneurship (Lang, Fink, & Kibler 2014):
Regulative elements: Formal rules in a place (e.g. property rights, subsidising laws)
Normative elements: Range of embedded norms in a place (e.g. solidarity, reciprocity)
Cognitive elements: Place-bounded categories and frames for interpretation (e.g.
entrepreneurial identity)
Three columns on the right side of the framework refer to systematising social entrepreneurs’
responses to the above mentioned institutional elements (Oliver 1991; Scott 2010; Welter and
Smallbone 2011). This builds on an integration of institutional theories of fields (DiMaggio
and Powell 1983; Scott 1995; Fligstein and McAdam 2012) as well as network and social
capital perspectives (Woolcock 1998; Lang and Novy 2014; Agger and Jensen 2015).
Mapping the field: Identification of the relevant organisational field for the case
organisation/s, key actors, intermediaries and external environment
Networking practices: Focuses on networking as a particular socially skilled action
and response to institutional constraints and as an attempt to benefit from
opportunities that arise in the external environment
9
Location-sensitive Institutions Organisational Responses
Regulative Elements Normative Elements
Cognitive Elements Organisational
Field(s) Level:
Mapping the field
Collective Actor Level
(Social Enterprise):
Networking practices
What regulations
restrict/enable our
social entrepreneurial
behaviour in the
region?
What is expected of
our social enterprise
in the region?
Who are we as a
social enterprise as a
regional actor?
What actions make
sense to our
organisation in this
context?
What is our relevant
organisational field
(e.g. historical
development, spatial
boundaries, shared
understandings of
purpose)?
Who are the
incumbents and who
are the challengers in
the field?
What are key
intermediaries and
external
stakeholders?
What is the role and
position of our SE in
the field?
Bonding and
bridging capital
Linking capital
Which horizontal
networking practices
have been applied to
cope with
constraining
institutional settings?
Which horizontal
networking practices
have we applied
within the
organisational field
to perceive and seize
opportunities?
How has networking
been used to appeal
to common interests
as well as mobilise
people and build
coalitions?
Which vertical
networking practices
have been applied to
cope with
constraining
institutional settings
(incl. intemediaries)?
Which vertical
networking practices
have we applied to
perceive and seize
opportunities (incl.
intemediaries)?
How has networking
been used to gain
legitimacy and
resources?
Table 1. Integrated analytical framework
10
6. Methodological considerations
The framework suggested here is most suitable for empirical research that follows the
paradigm of qualitative empirical research. A methodological approach that perfectly fits the
investigation into the role of linking capital for social entrepreneurs unfolding their potential
as change agents in disadvantaged rural regions. Social enterprises in rural contexts is a
relatively new and still under-researched phenomenon and thus exploratory methods are
needed to break new ground. Especially a qualitative case study approach appears suitable to
reconstruct the historical trajectory and meaning of this phenomenon in a concrete
institutional and territorial context (Sayer 1992; Yin 2009).
To tap the full potential of case based research and to ensure that the findings and insights can
be consistently linked to the common body of knowledge, a purposeful selection of cases is
crucial. We, thus, recommend to use well established taxonomies for selecting the cases
within the social enterprise field. In the case selection, researchers cannot only draw on the
specific features of accessible cases, but should also draw on quantitative context data on the
respective sectors and organisational fields, as well as on the regional social and economic
context (Agger and Jensen 2014; Lang, Fink, & Kibler 2014).
Methods for data collection and sources of data that methodologically fit the proposed
framework are (1) narrative interviews with founders and/or executives of the case social
enterprises will help to reconstruct the key phenomena and their interdependencies (Schuetze
1977; Lieblich, Tuval-Mashiach, & Zilber 1998). Here, researchers will gather most
information to fill the framework. (2) Semi-structured interviews with key representatives of
the local community should be employed to gather additional information on the institutional
context. (3) Expert interviews will provide contextual information on the respective
organisational field. (4) To triangulate types of data and overcome limitations of face-to-face
interviews as a method of data collection it is important to also engage in field observations of
enterprises and the respective local communities whenever possible. This extra effort will
increase the contextual and content related plausibility of our data. (5) In order to avoid being
trapped in the case and overcome the myopia of contextualisation, in research that relies on
the proposed framework in this paper, the primary data needs to be complemented by
secondary data. Especially, archival analysis seems to be instrumental.
In view of the mixed data emerging from the proposed research activities and the richness this
data implies, interpretative methods of data analysis seem to be first choice. Qualitative
content analysis of the material gathered will enable researchers to identify the concrete
configuration of the analytical elements comprised in the proposed framework (Strauss and
Corbin 2007). Depending on the specific focus of the research, both single and cross-case
analysis offer appear to be attractive (Eisenhardt 1989). In single case studies, researchers can
dig especially deep into the concrete meaning of specific practices. Through comparing
institutional factors and corresponding organisational practices in the different case studies,
generalities and differences can be identified, and individual elements can be contextually
verified.
11
In later phases in the development of this stream of research, the new ground broken through
exploratory research activities should be secured by testing the insights in confirmatory
studies. However, researchers have to ensure appropriate contextualisation also when
employing quantitative methods. Interdependencies uncovered in the qualitative studies can
be modelled as moderators or mediators.
7. Conclusions and discussion
In this paper, we present a framework for systematic investigation into the still under-
researched role of linking social capital for social entrepreneurs acting as change agents in
disadvantaged rural regions. We discuss the rooting of this framework in the dominant
streams of theorising. The results presented suggest that an integration of selected elements of
place-based institutional theory, strategic action fields theory and social capital theory as
useful for structured and theory-informed analysis of the interrelation between social
enterprises and their institutional context. It provides a critical reflection and refinement of
previous social capital approaches in the entrepreneurship literature (e.g. McKeever,
Anderson, & Jack 2014) focusing on the institutional and territorial embeddedness of
entrepreneurs. It adds to existing literature in the field, by mobilizing value-adding insights
from other disciplines in order to conceptualise linking social capital as a multi-level
analytical framework which helps analysing the capacity of entrepreneurs to leverage existing
social and economic resources for advancing social innovations in rural regions.
Research on social enterprises is an especially promising arena in which to apply the
analytical framework suggested, as it integrates the core elements of classical institutional
theories of fields (DiMaggio and Powell 1983; Scott 1995) as well as the more recent
theoretical approach of strategic action fields (Fligstein and McAdam 2011, 2012). It further
brings together this new integrative perspective on dynamics in the institutional context with a
place-based understanding. We argue that the resulting framework is a feasible approach to
developing a comprehensive body of knowledge in this challenging area of research. We hope
that the suggested framework is well received and that it is further developed in many future
studies.
Acknowledgments
Richard Lang’s contribution is supported by an APART-fellowship of the Austrian Academy of
Sciences and by a Marie Curie Intra-European Fellowship (IEF) [Project number 622728].
Matthias Fink’s contribution is supported by the H2020-MSCA-RISE-2015 research project “RurInno
- Social Innovations in Structurally Weak Rural Regions: How Social Entrepreneurs Foster Innovative
Solutions to Social Problems” (Grant Agreement number: 691181).
12
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